Can inflation data improve the real‐time reliability of output gap estimates?

Potential output plays a central role in monetary policy and short‐term macroeconomic policy making. Yet, characterizing the output gap involves a trend‐cycle decomposition, and unobserved component estimates are typically subject to a large uncertainty at the sample end. An important consequence is that output gap estimates can be quite inaccurate in real time, as recently highlighted by Orphanides and van Norden ( 2002 ), and this causes a serious problem for policy makers. For the cases of the US, EU‐11 and two EU countries, we evaluate the benefits of using inflation data for improving the accuracy of real‐time estimates. Copyright © 2004 John Wiley & Sons, Ltd.     

Discretion vs. timeless perspective under model-consistent stabilization objectives

Recent literature has reported situations in which discretion dominates timeless perspective in the presence of elements that reduce the slope of the New Keynesian Phillips curve. Considering a model-consistent welfare metric inhibits this mechanism in the standard New Keynesian framework.     

Climate Change and Adaptation: The Case of Nigerian Agriculture

The present research offers an economic assessment of climate change impacts on the four major crop families characterizing Nigerian agriculture. The evaluation is performed by shocking land productivity in a computable general equilibrium model tailored to replicate Nigerian economic development up to 2050. The detail of land uses in the model has been increased by differentiating land types per agro-ecological zones. Uncertainty about future climate is captured, using, as inputs, yield changes computed by a crop model under ten general circulation models runs. Climate change turns out to be negative for Nigeria in the medium term, with production losses and increase in crop prices, higher food dependency on foreign imports, and GDP losses in all the simulations after 2025. In a second part of the paper, a cost effectiveness analysis of adaptation in Nigerian agriculture is conducted. The adaptation practices considered are a mix of cheaper “soft measures” and more costly “hard” irrigation expansion. The main result is that the cost effectiveness of the whole package depends crucially on the possibility of implementing adaptation by exploiting low-cost opportunities which show a benefit-cost ratio larger than one in all the climate regimes.     

Assessing social impact in the field of sustainable tourism development: Evidence from Cabo Delgado (MZ)

ABSTRACT

Assessing the social impact of tourism-related activities is of paramount importance to promoting sustainable development. The present study aimed to assess the social impact of a project in Cabo Delgado (MZ), designed to increase local community residents’ employability in the emerging tourism sector through the delivery of vocational training programmes, utilising a multi-phase and mixed-method design. The study comprised three different phases (before, during, and after the intervention) and took into account the perspective of a variety of stakeholders. Programmes were perceived to be effective by local operators in the tourism sector and trainees, as they enhanced their living conditions and increased their employability. International operators and tourists, however, had not yet perceived their effectiveness. This study offers a methodological framework for social impact assessment by performing a programme evaluation as an integral part of the intervention itself. This methodology can be extended to other non-tourism related contexts.     

Word-of-mouth communications in marketing: a meta-analytic review of the antecedents and moderators

Although word-of-mouth (WOM) activity has been studied as an outcome variable of other constructs such as satisfaction, less attention has been given to the antecedents and moderators of WOM when considering WOM as a central construct. Hence, we propose a model of WOM antecedents and moderators using a meta-analytic review. The results show that all antecedents have significant effects on WOM activity, with customer commitment showing the strongest effect. The following hypotheses are also supported: (1) WOM valence is a significant moderator, (2) cross-sectional studies show a stronger influence of satisfaction and loyalty on WOM activity than longitudinal studies, and (3) studies of WOM behavior show a weaker link between loyalty and WOM activity than studies of WOM intentions. In addition, we show that satisfaction has a stronger relationship with positive WOM than loyalty, whereas (dis)loyalty has a stronger relationship with negative WOM than does (dis)satisfaction. We discuss this finding based on the different natures of positive and negative WOM. This article is based on the first author’s dissertation.     

The cost of search and rational random behavior

Sequential search for the lowest price is shown to be directly related to Theil's (1979) rational random behavior approach. An explicit relationship between the optimal number of searches and the optimal decision distribution is derived for the exponential family of price distributions.     

A semi-parametric Bayesian approach to the instrumental variable problem

We develop a Bayesian semi-parametric approach to the instrumental variable problem. We assume linear structural and reduced form equations, but model the error distributions non-parametrically. A Dirichlet process prior is used for the joint distribution of structural and instrumental variable equations errors. Our implementation of the Dirichlet process prior uses a normal distribution as a base model. It can therefore be interpreted as modeling the unknown joint distribution with a mixture of normal distributions with a variable number of mixture components. We demonstrate that this procedure is both feasible and sensible using actual and simulated data. Sampling experiments compare inferences from the non-parametric Bayesian procedure with those based on procedures from the recent literature on weak instrument asymptotics. When errors are non-normal, our procedure is more efficient than standard Bayesian or classical methods.     

Signaling safety

Contrary to signaling models’ central predictions, changes in the level of cash flows do not empirically follow changes in dividends. We use the Campbell (1991) decomposition to construct cash-flow and discount-rate news from returns and find the following: (1) both dividend changes and repurchase announcements signal changes in cash-flow volatility (in opposite directions); (2) larger cash-flow volatility changes come with larger announcement returns; and (3) neither discount-rate news, nor the level of cash-flow news, nor total stock return volatility change following dividend changes. We conclude cash-flow news—and not discount-rate news—drive payout policy, and payout policy conveys information about future cash-flow volatility.